American Hotel Income Properties REIT LP Announces US$50 Million Strategic Investment by BentallGreenOak and Highgate & Amendments to its Corporate Credit Facility – Wire Real Estate

American Hotel Income Properties REIT LP Announces US$50 Million Strategic Investment by BentallGreenOak and Highgate & Amendments to its Corporate Credit Facility

American Hotel Incom

iCrowdNewswire   Feb 8, 2021  12:05 PM ET

American Hotel Income Properties REIT LP is pleased to announce that BentallGreenOak Real Estate Advisors LP (“BentallGreenOak“) and Highgate Capital Investments, LP (“Highgate“) through HCI-BGO Victoria JV LP (the “Investor“), a joint venture limited partnership, have made an aggregate $50 million strategic investment (the “Investment“) in AHIP and its subsidiary, American Hotel Income Properties REIT Inc., (“AHIP REIT“), through the issuance of newly-created Series C preferred equity stock of AHIP REIT (the “Preferred Stock“) and warrants to acquire Units of AHIP (“Warrants“), on a private placement basis.  As part of the Investment, the Investor has nominated two seasoned investment and industry professionals to AHIP’s Board of Directors (“Board“).

The Investment provides several immediate strategic benefits to AHIP:

  • Validation of AHIP’s Business: The Investment demonstrates the strength of AHIP’s premium branded select-service hotel portfolio and asset management platform, and highlights that BentallGreenOak and Highgate, two leading institutional investors with significant experience in real estate and hospitality investing, recognize the value and growth potential of AHIP.
  • Establishes Long-Term Strategic Unitholders: The addition of two well-capitalized strategic partners positions AHIP to pursue and capitalize on attractive acquisition opportunities.
  • Strengthens AHIP’s Balance Sheet: Proceeds from the investment will enhance AHIP’s overall liquidity and capital structure, with net proceeds expected to be used towards immediate debt reduction. For accounting purposes, the Preferred Stock will be treated as $48.1 million in equity, and the Warrants will be recorded as a $1.9 million liability, on AHIP’s balance sheet. As a result of the Investment, AHIP now has total available liquidity of approximately $75 million, up from approximately $40 million at September 30, 2020, while at the same time decreasing AHIP’s pro-forma net debt-to-gross book value to 52.2%, compared to 56.2% at September 30, 2020.
  • Equity Participation at Attractive Pricing: The exercise price for the Warrants of $3.20 per unit (approximately C$4.10) represents a 30.5% premium to AHIP’s closing price of C$3.14 on January 28, 2021, a 31.8% premium to AHIP’s 10-day volume weighted average Canadian dollar trading price as of January 28, 2021.

“This investment illustrates the quality of our portfolio and strategy, as recognized by two leading institutional investors in the hospitality space,” said Jonathan Korol, CEO of AHIP. “The proceeds received will assist us in strengthening our balance sheet, improving our capital structure, and enhancing our ability to act on growth opportunities that may arise. BentallGreenOak and Highgate are aligned with our strategy, and we are excited to have established this partnership as we continue to improve on the temporary sector challenges from the COVID-19 pandemic and advance our portfolio’s growth and cash flow objectives.”

Mr. Korol also said, “I am also very pleased to welcome Mark Van Zandt of BentallGreenOak and Mahmood Khimji of Highgate to AHIP’s Board of Directors.”

Mark Van Zandt, Managing Partner of BentallGreenOak, said, “We believe AHIP’s premium branded select-service portfolio, under the leadership of this high quality management team, is well positioned to outperform during the ongoing hotel market recovery. We’re excited to partner with our friends at Highgate on this strategic investment and look forward to working with AHIP to achieve the Company’s growth objectives.”

Mahmood Khimji, Co-Founder and Managing Principal of Highgate, said, “Highgate is thrilled to commence this partnership with AHIP, along with BentallGreenOak. AHIP’s select service and extended stay portfolio, overseen by an exceptionally talented management team, is well-positioned for a robust recovery as national lodging fundamentals emerge from COVID-driven disruption. We look forward to partnering with Jonathan and the AHIP team over the coming years, and collaborating with the Company in the pursuit of future growth initiatives.”


Key terms of the Investment include:

  • The Investor received 50,000 Preferred Stock (the “Purchased Preferred Stock“) which is perpetual and redeemable by AHIP, and will be treated as equity on AHIP’s balance sheet. Subject to certain terms and conditions, the Purchased Preferred Stock provides for an annual dividend of 8.00% per annum for the first three years after issuance, and, to the extent still outstanding, increases to 9.00% per annum on the third anniversary of the issuance with further escalations after the fifth anniversary of the issuance.
  • The Investor received 19,608,775 Warrants (the “Purchased Warrants“) exercisable at any time prior to January 28, 2026 for units in AHIP (each a “Unit“) on the Toronto Stock Exchange (the “TSX“), at an exercise price (the “Exercise Price“) of $3.20 per Unit (approximately C$4.10), equivalent to 19.99% of the outstanding Units of AHIP following the Investment on an as-exercised basis. The Purchased Warrants may only be exercised by means of cashless exercise which will lead to an exercised ownership position of less than 19.99%.

In connection with the Investment, the Investor entered into an investor rights agreement with AHIP providing for, among other things, the right to nominate two directors to AHIP’s Board, customary registration rights, participation rights, and certain standstill and transfer restriction rights including a 24-month lockup on both the Purchased Preferred Stock and the Purchased Warrants. With the addition of Mr. Van Zandt and Mr. Khimji, AHIP’s Board now consists of eight members. 

Additional information regarding the Investment and the terms of the Purchased Preferred Stock and Purchased Warrants will be included in a material change report to be filed by AHIP on SEDAR at  This news release is only a summary of certain principal terms of the Investment and is qualified in its entirety by reference to the more detailed information contained in the material change report.


On January 28, 2021, AHIP amended its $225 million corporate credit facility (the “Facility“) with its lending syndicate. These amendments include:

  • Waiver of key financial covenants through December 31, 2021 and modified covenants through December 31, 2022;
  • Availability under the Facility fixed through December 31, 2021; and
  • Borrowings not subject to swap agreements will remain at LIBOR + 300 basis points with a minimum LIBOR balance of 0.25%.

Additional information regarding the Facility and its terms will be included in a material change report to be filed by AHIP on SEDAR at This news release is only a summary of certain principal terms of the Facility and is qualified in its entirety by reference to the more detailed information contained in the material change report.


CIBC Capital Markets and Deutsche Bank Securities Inc. acted as financial advisors and Farris LLP and Womble Bond Dickinson (US) LLP acted as legal advisors to AHIP. Latham & Watkins LLP and Davies Ward Phillips & Vineberg LLP acted as legal advisors to BentallGreenOak and Highgate.


BentallGreenOak and Highgate are making the Investment through the Investor, a joint venture Delaware limited partnership organized for purposes of making the Investment.

Pursuant to the subscription agreement with AHIP, the general partner of AHIP and AHIP REIT, the Investor subscribed for the Purchased Warrants. Of the total $50 million price paid by the Investor for the Purchased Preferred Stock and the Purchased Warrants, $1.9 million (approximately C$2.4 million) was allocated to the Purchased Warrants (or C$0.12 per Purchased Warrant). Each Purchased Warrant initially entitles the Investor to purchase one Unit at the Exercise Price per underlying Unit. The Purchased Warrants may be exercised at any time prior to January 28, 2026. 

Immediately prior to the Investment, the Investor and its affiliates owned no voting or equity securities in the capital of AHIP. The Purchased Warrants may only be exercised by means of a cashless exercise whereby the in-the-money value of a portion of any exercised Purchased Warrants must be applied to fund the Exercise Price for the balance of the exercised Purchased Warrants.  As of the date hereof, the Exercise Price exceeds the current market price of the Units and, consequently, the Investor is not entitled to acquire any Units on its exercise of the Purchased Warrants. However, if the Investor was entitled to, and did, exercise all of the Purchased Warrants by paying the full Exercise Price in cash, and not pursuant to a cashless exercise, the Investor and its affiliates would own 19,608,755 Units, or approximately 19.99% of the currently outstanding Units on a partially diluted basis, after giving effect to such exercise. 

The Investor intends to hold the Purchased Preferred Stock, Purchased Warrants and any Units issued to the Investor on the exercise of the Purchased Warrants for investment purposes. Depending on market conditions and other factors, including AHIP’s business and financial condition, the Investor or its affiliates (including BentallGreenOak and Highgate) may acquire additional securities of AHIP or its subsidiaries or dispose of some or all of the securities of AHIP or its subsidiaries that it owns at such time. 

An early warning report with additional information in respect of the foregoing matters will be filed and made available on the System for Electronic Document Analysis and Review (SEDAR) at under AHIP’s profile. To obtain a copy of this report, you may also contact Rahim Ladha at (416) 681-6309.  The Investor’s address is 870 7th Avenue, 2nd Floor, New York, NY 10019.


Certain non-IFRS financial measures are included in this news release, which includes net debt-to-gross book value. This term is not a measure recognized under International Financial Reporting Standards (“IFRS“) and does not have a standardized meaning prescribed by IFRS. Real estate issuers often refer to net debt-to-gross book value as a supplemental measure of financial condition.

Net debt-to-gross book values should not be construed as an alternative to measurement determined in accordance with IFRS as an indicator of AHIP’s financial condition. AHIP’s method of calculating net debt-to-gross book value may differ from other issuers’ methods and accordingly may not be comparable to measures used by other issuers. For further information, including reconciliations of certain of these non-IFRS financial measures to the closest comparable IFRS measure, please refer to AHIP’s MD&A dated November 9, 2020, which is available on SEDAR at and on AHIP’s website at

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